Monte Paschi Court Ruling May Be Feb. 2, Consumer Lawyer Says

Monte Paschi said on Jan. 17 that it’s reviewing its accounts after Bloomberg News reported that the lender engaged in a transaction with Deutsche Bank AG during the height of the financial crisis that masked a loss. Photographer: Alessia Pierdomenico/Bloomberg

Jan. 31 (Bloomberg) -- An Italian court may rule as soon as
Feb. 2 on a complaint by a consumer group trying to block
government plans to lend 3.9 billion euros ($5.3 billion) to
Banca Monte dei Paschi di Siena SpA, the group’s lawyer said.

The Rome-based administrative court for the Lazio region
may announce its ruling after hearing all the parties involved,
including Bank of Italy and Italian Treasury officials or their
legal representatives, Gino Giuliano, a lawyer for consumer
association Codacons, said today by phone. The court has
jurisdiction in administrative matters regarding government
decisions.

Earlier this week, Codacons filed a claim to the court
seeking damages from the central bank and other institutions for
not adequately monitoring Monte Paschi’s activities. The Siena,
Italy-based bank on Jan. 17 said it may be forced to restate
earnings after Bloomberg News reported that it used derivatives
to obscure losses. Accounting irregularities also led to a
criminal investigation targeting previous management.

The court also asked officials for the lender and market
watchdog Consob to testify, according to a copy of the court
document obtained by Bloomberg News. The Bank of Italy acted
vigilantly in its oversight of the lender, a former senior
official of the central bank who was involved in the inspections
told Bloomberg News yesterday.

‘Monti Bonds’

Monte Paschi is seeking state help to bolster its balance
sheet after the bank failed to meet the capital requirements set
by the European Banking Authority. The bank is also selling
assets and reducing risk and costs in a three-year plan to
restore liquidity. Under the government’s rescue plan, Monte
Paschi will sell securities, dubbed “Monti bonds” after the
prime minister’s surname, to the government with a 9 percent
coupon that may rise to as much as 15 percent.

The regional administrative court, or TAR, asked the Bank
of Italy to submit its board’s Jan. 26 opinion on Monte Paschi’s
rescue by no later than 24 hours before the hearing, the
document shows. The hearing is scheduled at 9:30 a.m. on Feb. 2.

The Bank of Italy will file the documents that are useful
for a correct comprehension and assessment of the matter, said a
spokeswoman for the central bank. A spokesman for the Finance
Ministry declined to comment on the Rome court’s hearing. A
spokeswoman for Monte Paschi didn’t have an immediate comment
and Consob didn’t immediately return calls seeking comment.

On Jan. 28 Monte Paschi’s Chief Executive Officer Fabrizio
Viola said the bank’s board will complete the bailout request by
early February and the Italian Treasury will conclude the
transaction by the end of that month.